How banks make profit

VietNamNet
Bridge
– How to make profits once the credit growth rate is curbed at 20 percent has become a headache for all banks. Expanding the scale of business through subsidiaries is one of the solutions.
It is not by chance that at the shareholders’ meetings these days, the board of directors of many joint stock banks submit plans to shareholders to set up new subsidiaries. Banks’ managers try to persuade shareholders that in current circumstances, when the central bank restricts banks from having the credit growth rate of more than 30 percent, this is the best way to ensure high profits.
It seems that commercial banks now well understand that they should not rely too much on expanding credit, and that they should seek profits from other kinds of services as well. The idea has prompted banks to rush to diversify their business fields.
Sacombank obtained a satisfactory business result in 2010 with a profit exceeding the target by … [Read more...] about Asked to tighten credit, banks try to expand business through subsidiaries

Risks plentiful as banks slash lending rates Thuy Trieu As the banking system is awash with cash given few corporate borrowers, many lenders in an effort to retain good clients have slashed lending rates, in certain cases to levels lower than deposit rates. How will this dilemma pose risks to the banking system? Following are answers by Tay Han Chong, CEO of Mekong Development Bank, in an interview with - The Saigon Times Daily. The Saigon Times Daily: What is your opinion about the circumstance of banks slashing lending rates to levels below the deposit rate? - Tay Han Chong: Banks should always weigh risks and costs when it comes to lending rates. No bank or any business can sustain loss making over long term. So if loans are offered at a lower rate than a short term deposit rate, it is not good for the overall health of the banking industry. Perhaps some banks are pressured to generate loan growth that they are willing to trade off profit for larger loans book. Will this … [Read more...] about Risks plentiful as banks slash lending rates

Banks mull structured savings to lure depositors By Thu Thuy - The Saigon Times Daily HCMC – Several banks will launch structured savings products to bring about better returns for depositors as the current deposit rate of 14% per year is deemed unattractive while the central bank will get tough against those banks breaching the deposit rate cap. Saigon Thuong Tin Commercial Bank, or Sacombank, is the pioneer in this area, having just introduced its new savings product called investment-linked savings at all transaction offices in Vietnam. The product aims at individual depositors who deposit at least VND200 million or US$50,000 at the bank. Customers can register for the pre-packaged product with terms from one to three months or any negotiated term. The bank’s consultants will advise customers on the trend of the global gold price, prices of commodities, or pairs of currencies like AUD/USD, EUR/USD, GBP/USD, and USD/CAD. Depositors will decide which trend to invest in … [Read more...] about Banks mull structured savings to lure depositors

The Vietnam Asset Management Co (VAMC) has bought VND840 billion (US$39.8 million) worth of bad debts in three domestic joint stock banks, the company announced. The Saigon Commercial Bank (SCB), Saigon-Hanoi Bank (SHB), and Petrolimex Group Bank (PG Bank) followed the lead of the Vietnam Bank for Agriculture & Rural Development (Agribank), which had earlier sold bad debts with a book value of VND2.5 trillion (US$118 million) to VAMC. VAMC, run by the central bank, said it will issue special bonds worth VND840 billion to the three lenders for the bad debts, which have a book value of more than VND1.15 trillion. Those bonds can be used to borrow from the State Bank of Vietnam for a ratio of up to 70 percent. The "bad debt bank" opened in July as the government aims to overhaul an estimated VND140 trillion in bad debts that have crimped lending and slowed the economy, which is facing its most severe slump in at least a decade. Lenders with bad debts of 3 percent or more are required … [Read more...] about VAMC buys $40 million in bad debts from three banks

The frozen real estate market with prices decreasing day by day has been impoverishing a lot of investors. Experts have warned that this may shake the banking systemPhan, an amateur real estate developer in Go Vap district in HCMCity, is now o­n a knife edge. He has to find buyers for his land plots as he has to get money to pay bank debts, due the end of this month. The story began in October 2007, when Phan, a high school teacher, decided to withdraw all his capital of VND5bil from the stock market, to inject in real estate. With the sum of VND5bil, plus VND3bil he borrowed from friends and relatives, he purchased a 7,000 ha land plot in district 2. The investment could have brought fat profit to Phan at that time, when the stock market was lackluster. The fat profit prompted him to borrow VND2bil from banks to make investment in a further deal. However, Phan cannot make profit o­n the deal. He now has no other choice than selling the land plots to recover money. However, … [Read more...] about Real estate market frozen, investors, banks suffering